April 20, 2024

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[THE INVESTOR] Hahn & Co., a local private equity investment firm, was selected as the preferred bidder for the offline division of SK Encar, Korea’s major used car seller, according to sources on Nov. 2.

Hahn & Co. has reportedly proposed purchasing SK Encar for around 200 billion won (US$179 million), which is at the top range of an expected deal value of between 100 billion won and 200 billion won. 

In September, SK Holdings, the holding firm of Korea’s third largest conglomerate SK Group, had put its used car business up for sale. 

The deal attracted bids from major PEFs such as Hahn & Co., STIC Investment, Keistone Partners and Medici Investment which were seeking synergies with their existing automobile or logistics businesses with the acquisition. Hahn & Co. had earlier invested in SsangYong Materials, an auto parts maker.

SK Encar posted 818.9 billion won revenue and 10 billion won operating profit last year. It sold 68,000 used cars in 2016 through 26 regional trading offices across the country. Despite the overall growth of the nation’s used car sector, it has been suffering from slowing profits, with a market share of less than 3 percent last year.

The nation’s antitrust law that earmarks used car business for small and medium enterprises is also believed to have influenced the decision as the group faces regulatory limits for business expansion.

Following the sale, industry watchers say SK is likely to focus more on its car-sharing business. It has invested in Socar, the nation’s No. 1 car-sharing platform and San Francisco-based car-sharing company Turo together with Germany’s Daimler and other investors.

Hahn & Co. was founded in 2010 by Hahn Sang-won, who worked for Morgan Stanley for 15 years.

By Park Ga-young (gypark@heraldcorp.com)